Bourse rises to 2-month high on financials, foreign inflow

Thursday, 10 April 2014 01:49 - - {{hitsCtrl.values.hits}}

Reuters: The share index rose to a near two-month closing high on Wednesday, led by financial shares such as Ceylinco Insurance Plc, while heavy foreign buying in the country’s risky assets also boosted sentiment. The main stock index closed 0.19%, or 11.39 points, firmer at 6,083.55, its highest close since 12 February. Analysts expect the market to gain further due to prevailing lower interest rates. Brokers say the $ 19.50 billion worth stock market is gradually attracting investors who are looking for higher returns as the deposit rates in banks and financial companies are not beyond 6-6.5%. The day’s turnover was Rs. 1.32 billion, well above this year’s daily average of Rs. 1 billion. The Bourse saw net foreign inflows of Rs. 793.4 million, though foreigners have net sold Rs. 8.5 billion worth of shares so far this year. Analysts, however, said foreign investor sentiment is yet to recover after the United Nations on 27 March announced it would probe alleged war crimes by the island nation. The Bourse has suffered Rs. 4.37 billion in foreign outflows in the nine sessions since 28 March due to the exit of a large foreign fund. Shares in Ceylinco Insurance gained 4.18% to Rs. 1,390.10, with 928 shares changing hands. The United Nations has launched an inquiry into war crimes allegedly committed by both Sri Lankan State forces and Tamil rebels during a conflict that ended in 2009, saying the Government had failed to investigate properly. Analysts said the outcome of the resolution was expected, but investors’ sentiment has been dented over concerns it could hurt the country’s economy. Several potential buyers of risky assets are waiting for a clear direction.

State banks’ dollar buying defends rupee from appreciation

Reuters: The rupee closed flat as dollar buying by two State banks helped offset the appreciation pressure resulting from greenback inflows from worker remittances and exporter dollar sales ahead of the festive season, dealers said. The spot rupee ended at 130.59/61 per dollar, little changed from Tuesday’s close of 130.57/63. Dealers said the currency would have gained sharply in the absence of dollar buying by the two State banks, through which the Central Bank usually directs the market. Dealers said they do not expect any gains in the rupee from an expected $ 500 million inflow from a five-year sovereign bond, which was sold at a yield of 5.125%, as the Central Bank will absorb the entire proceeds. Central Bank Governor Ajith Nivard Cabraal at a Reuters Global Market Forum on Wednesday said a sharp depreciation or appreciation was unlikely “although a gentle trend could perhaps take place”. The local currency had been steady at 130.70 per dollar for the six sessions through 2 April, as dealers were reluctant to trade due to moral suasion by the central bank, before it appreciated on seasonal inflows. Depreciation pressure is seen easing due to expected inflows from remittances that will prompt dollar selling by banks.